Economy

Days numbered for military, educator tax-exempt status

The Finance Committee of the Legislative Yuan passed May 10 the first reading of a bill that would cancel the income tax exemption currently given to military and education professionals.

If the bill passes its third and final reading during the current legislative session, it would affect some 371,000 citizens and bring an additional NT$11.2 billion (US$357 million) to the nation’s tax coffers, sources said.

The extra revenue will then be divided among the Ministry of Education, the Ministry of National Defense and the Ministry of the Interior, Finance Ministry officials said.

Monday’s move by the legislative committee was the result of a strong demand from the Cabinet, as Premier Den-yih has asked ruling party lawmakers to push through the bill before the current legislative session ends in June.

The draft bill was first submitted to the Legislative Yuan in 2002, but was subsequently left to languish due to strong opposition from public school teachers and soldiers who enjoy the tax exemptions.

To win support for the legislation, the ministries of education and national defense have proposed to return part of the revenue to those affected through additional benefits, salary increases and the like.

However, the expected tax revenue would not be as impressive as it would otherwise have been due to recent adjustments of income tax deductibles and tax rates, officials said.

According to the 2002 version of the bill, the Ministry of Education was projected to receive an additional NT$9.8 billion in additional revenues after the bill was passed. It is now expected to receive NT$7.17 billion.

The Ministry of National Defense will receive an additional NT$3.8 billion, down from the NT$5.73 billion originally estimated in 2002. Most employees of the MND will not have their bottom lines affected by the proposed bill, a MND spokesperson said, as the ministry will find other ways to compensate them.

The Ministry of the Interior is expected to receive NT$230 million in additional revenues after the bill is passed. (TYH-HZW)